2011's Best Performing Gold Stocks

By Investopedia Staff | December 14, 2011 AAA

During periods of crisis, investors often flee risky asset classes and invest in assets or commodities that they feel will hold value. Gold is a prime example.

Gold is relatively rare and it is respected across borders; therefore, unlike currencies, it is believed to hold its value over time. And gold's value isn't just speculation: Historic charts show that gold spiked from about $150 dollars an ounce in the mid-1970s to around $1,600 an ounce in 2011. As fears of volatility took hold in 2011, gold prices skyrocketed. The question is, what's the best way to invest in it? (Think the value of gold is unshakable? Read The Gold Standard Revisited to learn about its rise and fall.)
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Investing in Gold
While collecting jewelry with a high gold content or gold coins is the method preferred by some, there are downsides to consider. For example, there is the issue of finding a safe place to store such merchandise. Finding a buyer for a particular piece may also be difficult. Plus, there is sometimes a very big markup on certain pieces. The simplest method would be to buy a Gold ETF, such as SPDR Gold Trust ETF (NYSE:GLD) or the iShares Gold Trust ETF (NYSE:IAU).

But there is an alternative for investors who want to gain exposure to gold: the stock market. Check out these five simple gold stock plays.


Company Market Capitalization YTD %Return
Yamana Gold Inc (NYSE:AUY) 10.42B +17.02%
Randgold Resources Limited (Nasdaq:GOLD) 9.12B +24.85%
Franco-Nevada Corporation (NYSE:FNV) 4.77B +12.33%
Royal Gold Inc (Nasdaq:RGLD) 3.93B +30.53%
Allied Nevada Gold Corp (AMEX:ANV) 2.66B +30.5%

The Risks
Investors need to also understand is that the price of gold can fluctuate widely. In 1980, the price of gold had risen to about $850 an ounce, a huge increase given that just a couple of years prior it was trading under $200. But not too long after that spike, gold lost a bit of its luster, and the price floundered until 2005 when interest started to pick up again. As such, investors who purchased at or near the top of the market in the 1980s had to wait about 25 years to recoup their investments. (To learn how to combine technicals and fundamentals to confirm trends in this commodity, read A Holistic Approach To Trading Gold.)

Bottom Line
Investors tend to flock to gold in times of market crisis. Widespread international acceptance and recognition of this circumstance makes it likely that this trend will continue in the future. Adding a little gold to your portfolio might help you mitigate risk; the five stocks presented here are a great starting point for your gold stock search. (For further reading, check out Does It Still Pay To Invest In Gold? and Getting Into The Gold Market.)

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